Start using a “spending system”

The best way to keep your spending in check is to have a system that gives structure to your day-to-day finances, and removes the guesswork from trying to spend less. Your system can be as high-tech or low-tech, as simple or as complex as you’d like. Here are some effective methods to consider:

The jars. Place a budgeted amount for each spending category (for example, “groceries,” “entertainment,” “transportation”) into a labeled jar or envelope. When the money in each jar or envelope starts to runs out, you make tradeoffs or curb spending until it’s time to replenish.

Three questions. Before you buy anything, ask yourself three questions: (1) Do I really need this? (2) Do I have the money in the bank to pay for it right now? (3) What will happen if I don’t buy it? Only make a purchase if the first two answers are “yes” and the third answer is convincing.

Pay yourself first. Divert a specific amount of your income (such as 10% or $100) directly into savings as soon as you get it. The rest is yours to spend as you need and wish. Read more about why paying yourself first is so important.